ASB cuts 18 month fixed home loan rate by 26 basis points, ahead of the Reserve Bank's OCR decision, and in the face of a stuttering real estate market

In a surgical move, major bank ASB has cut 26 basis points from its 18 month fixed home loan rate, taking it down to 6.89% and below all its main rivals for that term. 

Essentially it has moved its two year rate level to the shorter period.

Any rate move ahead of the uncertain result from Wednesday's RBNZ Monetary Policy Statement and Official Cash Rate review is slightly unusual. Banks are looking for any opening to stand out in a real estate market that is essentially misfiring this year.

“This competitive 18-month rate will be good news for people looking to hedge their bets in the current economic environment. Whilst we don’t know the direction of the OCR, wholesale rates remain elevated and the geo-political environment remains volatile. Our 18-month rate may appeal to customers who want to balance security with flexibility,” said Adam Boyd, ASB's Executive General Manager Personal Banking.

Carded rates are one thing, but what you will be offered after negotiation is another because loan officers will have some discretion to win new business or hold existing clients.

There was no matching cut to ASB term deposit rates with today's change announcement.

Wholesale swap rates ticked higher in early February and have stayed up, helped along by the market sentiment that responds largely to the global pressures at play for terms 2 years and longer. There are no matching wholesale rate changes that might have brought today's ASB change. Competitive pressures in the retail home loan are likely to be the trigger.

Obviously you should negotiate and shop around. Most banks will discount their carded home loan rates if you have strong financials. You shouldn't need them but if you are uncomfortable negotiating, a broker can often be helpful. But be aware some brokers won't offer you the best over the whole market, only the banks they have approved connections to in their "lending panel." And clearly bank mobile managers are there to pitch their company's own product.

One useful way to make sense of the changed home loan rates is to use our full-function mortgage calculator which is below. (Term deposit rates can be assessed using this calculator).

And if you already have a fixed term mortgage that is not up for renewal at this time, our break fee calculator may help you assess your options. But break fees should be minimal in a rising market. They will become important in a falling market however.

Here is the updated snapshot of the lowest advertised fixed-term mortgage rates on offer from the key retail banks at the moment.

Fixed, below 80% LVR	6 mths	1 yr	18 mth	2 yrs	3 yrs	4 yrs	5 yrs
as at February 27, 2024	%	%	%	%	%	%	%
ANZ	7.35	7.39	7.15	6.89	6.75	7.34	7.34
	7.39	7.39	6.89 -0.26	6.89	6.65	6.55	6.55
	7.39	7.29	6.99	6.85	6.65	6.55	6.55
	7.39	7.35		6.89	6.75	6.69	6.59
	7.39	7.29	6.95	6.89	6.65	6.59	6.39
Bank of China		7.09	6.99	6.89	6.79	6.69	6.59
China Construction Bank	7.19	7.09	6.89	6.75	6.49	6.40	6.40
Co-operative Bank	7.39	7.35	7.15	6.89	6.75	6.75	6.75
Heartland Bank		6.69	6.59	6.45	6.19
ICBC	7.19	7.05	6.95	6.85	6.59	6.49	6.49
	7.45	7.45	7.25	6.95	6.79	6.69	6.59
	7.39	7.39	7.19	6.75	6.75	6.79	6.79